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The Effects of Taxes and Socioeconomic Variables on Market Work and Home Production in Norway in the Years 1970 to 2000

This paper analyses significant forces of the allocation of time to different home production activities, as developed by Gronau, in a data set consisting of decennial time-use surveys of Norwegian households. The theoretical framework consists of joint allocation of time model, where household decisions to allocate time between the market and the household are analyzed simultaneously. The estimation takes place within a limited dependent variables framework. As an alternative to the usually employed Tobit model, Cragg´s double-hurdle model is used, so as to be able to model individual decisions in a two step framework, discerning between the wish to participate and the amount of time to invest in different activities. The conclusion of the paper is that taxation has a significant effect on the allocation of time to market and non-market activities. There is evidence in favour of more disaggregation of time-use, but the overall message of the home production literature – that explicit consideration of the market-versus-home production margin can improve estimates of labor supply elasticities - is upheld.

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File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2003/Memo-33-2003.pdf
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number 33/2003.

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Length: 59 pages
Date of creation: 04 Mar 2003
Date of revision:
Handle: RePEc:hhs:osloec:2003_033
Contact details of provider: Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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  1. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1990. "Homework In Macroeconomics I: Basic Theory," Working Papers 90-17, C.V. Starr Center for Applied Economics, New York University.
  2. James Tobin, 1956. "Estimation of Relationships for Limited Dependent Variables," Cowles Foundation Discussion Papers 3R, Cowles Foundation for Research in Economics, Yale University.
  3. Jess Benhabib & Randall Wright & Richard Rogerson, 1990. "Homework in Macoreconomics I: Basic Theory (Part I of II)," NBER Working Papers 3344, National Bureau of Economic Research, Inc.
  4. Deaton, Angus & Irish, Margaret, 1984. "Statistical models for zero expenditures in household budgets," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 59-80.
  5. Graham, John W & Green, Carole A, 1984. "Estimating the Parameters of a Household Production Function with Joint Products," The Review of Economics and Statistics, MIT Press, vol. 66(2), pages 277-82, May.
  6. Daunfeldt, Sven-Olov, 2001. "Intra-household Allocation of Time to Household Production Activities - Evidence from Swedish Household Data," Umeå Economic Studies 555, Umeå University, Department of Economics.
  7. Gronau, Reuben, 1977. "Leisure, Home Production, and Work-The Theory of the Allocation of Time Revisited," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1099-1123, December.
  8. Kerkhofs, M.J.M., 1991. "Identification and estimation of household production models," Research Memorandum 85d8aa5f-3135-432a-9c6a-5, Tilburg University, School of Economics and Management.
  9. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
  10. Jess Benhabib & Richard Rogerson & Randall Wright, 1991. "Homework in macroeconomics: household production and aggregate fluctuations," Staff Report 135, Federal Reserve Bank of Minneapolis.
  11. Ugo Colombino & Steinar Strøm & Rolf Aaberge, 2000. "Labor supply responses and welfare effects from replacing current tax rules by a flat tax: Empirical evidence from Italy, Norway and Sweden," Journal of Population Economics, Springer, vol. 13(4), pages 595-621.
  12. Kooreman, Peter & Kapteyn, Arie, 1987. "A Disaggregated Analysis of the Allocation of Time within the Household," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 223-49, April.
  13. Blundell, Richard & Walker, Ian, 1986. "A Life-Cycle Consistent Empirical Model of Family Labour Supply Using Cross-Section Data," Review of Economic Studies, Wiley Blackwell, vol. 53(4), pages 539-58, August.
  14. repec:dgr:kubrem:1991472 is not listed on IDEAS
  15. Gronau, Reuben, 1987. "Home production -- A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 4, pages 273-304 Elsevier.
  16. Amemiya, Takeshi, 1974. "Multivariate Regression and Simultaneous Equation Models when the Dependent Variables Are Truncated Normal," Econometrica, Econometric Society, vol. 42(6), pages 999-1012, November.
  17. Fortin, Bernard & Lacroix, Guy, 1997. "A Test of the Unitary and Collective Models of Household Labour Supply," Economic Journal, Royal Economic Society, vol. 107(443), pages 933-55, July.
  18. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  19. Gronau, Reuben, 1997. "The Theory of Home Production: The Past Ten Years," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 197-205, April.
  20. Flood, Lennart, 1988. "Effects of taxes on non-market work : The swedish case," Journal of Public Economics, Elsevier, vol. 36(2), pages 259-267, July.
  21. Klevmarken, Anders, 1998. "Microeconomic Analysis of Time-use Data. Did we reach the promised land?," Working Paper Series 1998:12, Uppsala University, Department of Economics.
  22. Marcel Kerkhofs & Peter Kooreman, 2003. "Identification and estimation of a class of household production models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(3), pages 337-369.
  23. Gronau, Reuben, 1980. "Home Production-A Forgotten Industry," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 408-16, August.
  24. Paul van den Noord, 2000. "The Tax System in Norway: Past Reforms and Future Challenges," OECD Economics Department Working Papers 244, OECD Publishing.
  25. Aaberge, Rolf & Dagsvik, John K & Strom, Steinar, 1995. " Labor Supply Responses and Welfare Effects of Tax Reforms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 635-59, December.
  26. Pollak, Robert A & Wachter, Michael L, 1975. "The Relevance of the Household Production Function and Its Implications for the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 255-77, April.
  27. Flood, Lennart, 1998. "The Structure of the Tax-system and the Estimation of Labor Supply Models," Working Papers in Economics 1, University of Gothenburg, Department of Economics.
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